When Taxpayers Struggle to Obtain an EIN, Everyone Loses
IRS Apply for an Employer Identification Number (EIN) online
When Taxpayers Struggle to Obtain an EIN, Everyone Loses
For many Americans, starting a business represents independence, opportunity, and the chance to contribute to their communities. But before they can open a bank account, hire employees, or file taxes, they need one thing from the IRS: an Employer Identification Number (EIN).
Unfortunately, too many taxpayers encounter obstacles in obtaining an EIN. The process, which should be straightforward, can be marred by delays, technical glitches, and inconsistent procedures that frustrate both taxpayers and tax professionals.
The Challenges
Taxpayers applying online must complete the application in a single session that times out after 15 of inactivity. Applicants may have to try several different web browsers to get the application to go through. Only one EIN may be issued per responsible party per day. Applicants outside the United States cannot use the online system at all, forcing them to mail or fax Form SS-4, Application for Employer Identification Number, which is a process that can take four weeks or more.
Even when taxpayers follow the rules, they frequently encounter error codes that require IRS intervention. For example, a mismatch between the responsible party’s name and Social Security number may stop an application cold, even if the taxpayer’s records are correct. Other codes reflect system overloads, instructing applicants to “try again later.”
Delays compound the problem. Backlogs in manually processing EIN applications leave businesses unable to open accounts or begin operations. In some cases, taxpayers report receiving EINs they never requested—raising concerns about errors or identity theft.
Getting an EIN letter can be more complicated than expected. The EIN letter is often what is used for opening a bank account and other start up processes. If a taxpayer is successful in completing the online application, they can choose to download their CP 575 confirming the receipt of their EIN. However, if they do not download it or have any technical issues, they must wait one month before requesting a Letter 147C EIN verification letter, creating further obstacles to timely business startup.
Why This Matters
The IRS has long emphasized taxpayer compliance and the need for timely filing. But when taxpayers cannot even begin the process of establishing their businesses because of systemic barriers, we risk discouraging entrepreneurship and eroding trust. Small business owners—who form the backbone of our economy—should not be forced to wait weeks for something as fundamental as an identification number.
A Path Forward
To serve taxpayers effectively, the IRS must modernize its EIN application process. That means:
- Expanding online access to international taxpayers and those without Social Security numbers or ITINs.
- Increasing the session time allowed for an applicant to complete the form.
- Updating online systems that produce unnecessary error codes.
- Reducing backlogs in manual processing by prioritizing EIN processing, especially during peak filing seasons.
- Enhancing communication so taxpayers understand why applications are delayed and what steps they can take.
- Add a warning to the webpage where taxpayers print their EIN confirmation letter letting them know that if they do not download it, they will be unable to come back to the platform to print it and cannot request a letter from the IRS for 30 days.
Just as importantly, taxpayers must be protected from scams. Unscrupulous websites often charge fees for EINs that the IRS issues free of charge. Clearer guidance and more prominent public outreach can help taxpayers avoid falling victim to these schemes.
Conclusion
An EIN should be a gateway to economic opportunity, not a barrier. The IRS must ensure that this critical process is efficient, transparent, and accessible to all. When taxpayers can quickly and easily obtain an EIN, they can focus on what matters most: building their businesses, supporting their families, and strengthening their communities.
Resources
Tax Tip: Getting an Employer Identification Number
IRS: Employer identification number
IRS: Get an employer identification number
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